Bacon's Rebellion

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McDonnell Budget Short-Changes General Fund Programs

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by

James A. Bacon
in ,

Click on chart for more legible image.

The Commonwealth Institute has come out swinging with the toughest critique of Gov. Bob McDonnell’s proposed 2013-14 budget that I have yet seen. States a new report, “Reality Check,” written by Sara Okos and Michael J. Cassidy:

Instead of reforming, reallocating and reinvesting in the programs that make government more efficient, effective and accountable, the Governor’s proposal strikes at – and cuts – the core services that Virginians rely on every day while at the same time widening tax loopholes that drain yet more resources from the state.

The Governor has proposed more than $880 million in cuts to services to close the budget shortfall and fund his new initiatives. More than 90% of those cuts are in the areas of education and health care. His budget also widens loopholes in the state tax code by expanding tax expenditures and creating new ones “with little to no evidence of their effectiveness.”

McDonnell has justified his budget choices by noting that state spending has increased 23% in recent years. But he overlooks the fact that all of the increase has come from Non-General Fund expenditures, the report contends, while General Fund expenditures have declined five percent over the past decade when adjusted for inflation and population growth. The General Fund supports core state programs like education, Medicaid and public safety.

This report will provide ammo to Democrats and others who oppose McDonnell’s proposals to expand the use of tax exemptions, credits and the like and to institutionalize the diversion of General Fund revenues to transportation.

— JAB

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6 responses to “McDonnell Budget Short-Changes General Fund Programs”

  1. TMT Avatar
    TMT

    From Fairfax County’s perspective, we get screwed on the LCI formula for funding schools. The formula does not consider either differences in the cost of living or require a minimum local real estate tax contribution. Also, I view the issue as dollars sent to Richmond versus the amount of pennies, nickels and dimes sent back. Fairfax County is more likely to get a better return on transportation tax dollars, so if K-12 state aid is not increased or is even cut and transportation funding is increased, it is more likely than not, Fairfax County residents are benefited. State aid is fungible.
    Now few people in Fairfax County understand this and will likely be upset. But I’d rather have the dollars coming back for transportation and pay school taxes myself.

  2. larryg Avatar
    larryg

    Oh Contraire!

    “…… Other savings included $65 million from eliminating the cost-of-competing adjustment for support positions in public schools (an adjustment mostly used by Northern Virginia school districts)”

    http://blogs.fredericksburg.com/newsdesk/2011/12/19/mcdonnell-proposes-85-billion-two-year-budget/

    NOW, you WILL BE screwed!!

    😉

  3. TMT Avatar
    TMT

    Larry, you are correct. I was not as precise as I needed to be. The LCI does take into account the differences in the price of housing. That is what I should have said.

  4. larryg Avatar
    larryg

    TMT – here it is… note the property value component

    Average Daily Student Membership Component=
    .5 [((Local True Property Value)/(Local ADM))/ ((Total Statewide True Property Values)/ (Statewide ADM))]

    +.4 [((Adjusted Gross Income)/ (Local ADM))/ ((Total Statewide AGI)/ (Statewide ADM))]

    this was excerpted from Del Albo’s blog:

    http://delegatedavealbo.wordpress.com/2009/10/14/school-funding-local-composite-index/

    +.1 [((Local Taxable Retail Sales)/ (Local ADM))/ ((Total Statewide Taxable Retail Sales)/ (Statewide ADM))]

    Overall Local Population Component=

    .5 [((Local True Property Values)/ (Local Population))/ ((Total Statewide True Property Values)/ (Statewide Population))]

    +.4 [((Adjusted Gross Income)/ (Local Population))/ ((Total Statewide AGI)/ (Statewide Population))]

    +.1 [((Local Taxable Retail Sales)/ (Local Population))/ ((Total Statewide Taxable Retail Sales)/ (Statewide Population))]

    Local Composite Index =
    ((.6667 x ADM Component) + (.3333 x Local Population Component)) x 0.45

  5. FreeDem Avatar
    FreeDem

    “McDonnell has justified his budget choices by noting that state spending has increased 23% in recent years. But he overlooks the fact that all of the increase has come from Non-General Fund expenditures, the report contends, while General Fund expenditures have declined five percent over the past decade when adjusted for inflation and population growth. ”

    I’ve looked through the report and it seems confusing when it talks about the Non-General Fund. It talks about surging income from non-general fund sources because of the Recovery Act, other federal programs, and college tuition. But that money should just go right back out to fuel Non-General Expenditures without forcing out General Fund Expenditures. Aside from transportation, is there a significant Non-General Fund Expenditure that’s actually pushing out investment in the General Fund?

  6. James A. Bacon Avatar
    James A. Bacon

    FreeDem, Far be it for me to defend the Commonwealth Institute, with which I frequently disagree, but… I think the point is simply that Non-General Fund revenue has grown while General Fund revenue (adjusted for population growth and inflation) has contracted somewhat. CI doesn’t make any claim that NGF revenue has come at the expense of GF revenue. NGF revenues come from sources that are increasing, while GF revenues come from sources that are stagnant.

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